Contracting in the UK: All About Insurance

When you run a contracting business, you need to deal with the risk of litigation from a number of quarters. While some kinds of insurance for contractors are a legal requirement, others are a good idea, in view of lowering your risk of costly lawsuits. Here are a few most important kinds of insurance that you need to consider when launching your own contracting business.

Contracting Business Insurance

Indemnity insurance

When you provide professional consulting services to a client, you need to accept the risk that at some point, you could make a professional mistake that could result in losses to the client.

While Britain isn’t the litigious society that the United States is, a single case of litigation is all it takes to bankrupt a business in some cases.

Buying insurance for indemnity against losses resulting from charges of professional incompetence or poor quality work can be an important way of keeping alive the business that you’ve put years of hard work into. Many small contracting businesses buy coverage for as much as £10 million.

Liability insurance

Contracting businesses need to consider two kinds of liability insurance.

Public liability insurance: If your clients or business partners visit you at your place of business, you need to plan for the possibility that at some point, a visitor may suffer some sort of accident while on your premises.

It doesn’t even matter if you don’t have a formal office to protect with insurance. You can find yourself sued for accidents that occur when clients or business partners visit you on business at home, too.

Buying public liability insurance is always a good idea when you run a business.

Employer liability insurance: If your business employs temporary or regular workers, you need to plan for the possibility of being sued by an employee over an accident, a discrimination or harassment charge or other such workplace-related problems.

The premiums for employer liability policies don’t always depend on the level of coverage you buy.

The specific business risks involved in your line of business are an important factor, too. Roofing contractors, for instance, are usually charged the highest rates.

Not only is employer liability insurance advisable, it’s a legal requirement in Britain. You can find more information on the legal requirements involved in running a contracting business in the U.K. in these resources for contractors.

Buying insurance to protect your office

Public liability insurance protects you from personal injury lawsuits arising out of accidents in your office or business premises. Office insurance protects your office in another way – against losses occurring through vandalism or theft.

Small contractors who work out of home may not need to buy separate office insurance. They could just need to contact their home insurance company to ask about cheap, add-on coverage.

Insurance for contractors whose business depends on computers

It isn’t just IT contracting firms that depend on computers for their business. Legal contractors, accounting contractors and tax firms depend on their computers to stay in business, too. In today’s environment of constant computer-based security threats, it’s a good idea to use e-risk insurance to protect against the consequences of a hacking attack or a malware attack.

Choosing the right insurance product

Buying different kinds of insurance doesn’t have to be expensive. Many insurance companies offer comprehensive contractors’ packages that bundle all the required insurance types in one easy-to-manage deal. These tend to be priced lower than a set of discrete insurance policies. It’s always a good idea to consider such a bundled insurance deal.


Amanda Nieves is in insurance. She enjoys blogging to help others better understand the importance of insurance and how it works.

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